Financial Sector and Regulators Need More Diversity

WASHINGTON, D.C. (March 5, 2013) — Both the financial services industry and the agencies that regulate it could benefit from greater diversity, agreed leaders from the business and regulatory worlds who attended Tuesday’s Opportunity Summit in Washington, D.C.

The half-day event at the National Press Club was organized by The Greenlining Institute (www.greenlining.org) and featured Rep. Maxine Waters (D-Calif.), who authored the language in the Dodd-Frank financial reform law that created Offices of Minority and Women Inclusion in all of the federal financial regulatory agencies.

In addition to extensive discussion of how to bring diverse leadership into the staffs and executive suites of financial institutions and the agencies that regulate them, speakers also focused on contracting practices and how both banks and communities can benefit when minority-owned small businesses have a fair chance to compete for contracts with financial corporations.

“Diversity isn’t just a feel-good policy for communities of color, it’s necessary for a healthy economy,” said Greenlining Institute Executive Director Orson Aguilar. “During the housing bubble and subsequent crash, we saw what happens when regulators lose touch with what’s happening in diverse communities.

“Right now,” he continued, “for every dollar of wealth a white family owns, the median Asian family has 63 cents, the median Latino has seven cents, and the median African American family has less than a nickel. In a nation where ‘minorities’ will soon be the majority, that level of inequality is an invitation to disaster. And the financial sector is one of the keys to avoiding that disaster.”

Prof. Cheryl Nichols, who teaches business law at the Howard University School of Law framed the issue succinctly, saying, “The economic empowerment of communities of color is one of the most important civil rights issues of our time.”

Several federal officials spoke of the need to ensure that their agency staffs represent a wide variety of backgrounds and experiences, a process that is being facilitated by the newly-created Offices of Minority and Women Inclusion (OMWI). ”We’re building a new agency from the ground up,” said Stuart Ishimaru, OMWI Director at the Consumer Financial Protection Bureau, which was also created by the Dodd-Frank law. “Because our job is to serve a diverse public, we need to build in diversity and inclusion from the ground up as well.”

Michael Peevey, president of the California Public Utilities Commission, focused on the CPUC’s longstanding and successful program to promote diversity in contracting. The program has been a boon for California’s utility and telecommunications companies, who often get better and more affordable goods and services because of the increased competition the program stimulates. But he noted that small businesses sometimes lack experience in competing for big corporate contracts and may need guidance in order to succeed.

“The CPUC has promoted the use of diverse suppliers for many years, calling upon Fortune 500 companies like AT&T to invest in smaller companies so that the larger companies in turn have more qualified competitors for their contracts,” Peevey said. “It works, but because small businesses may not have experience in these areas, larger companies need to help educate smaller companies by providing timely feedback on unsuccessful bids, or holding pre-bid conferences.”

Union Bank Executive Vice President and Chief Diversity Executive George Ramirez added that diversity must happen at all levels, saying, “Every business leader should be thinking about the diversity of their future customers and asking themselves what sort of workforce might better serve those customers. Then, we need systemic processes and system changes to promote diversity and inclusion right up though the executive level.”